It would work well enough; OS X can be set up a great little FTP server. However, a Power Mac G4 uses older, lower capacity, harder to find these days PATA hard disks unless you install a PCI SATA card in it. That would probably be its biggest limitation these days. The other thing to consider is power consumption; a G4 tower that is left on 24/7 as a server sucks down a fair amount of wattage. You may be better served by using a smaller, more efficient machine for a simple FTP server.
Of course, if you really want to use the Power Mac, it'll work just fine. Just be prepared for the power bill, a bit of extra heat, and some noise.